Annual Report 2004

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Corporate Governance AUDIT COMMITTEE The Audit Committee is responsible to the Board and consists of four non-executive Directors, three of whom are independent. The members are Vernon Moore, Peter Lee and Jack So. It is chaired by an independent non-executive Director, Raymond Or. The Committee held three meetings during 2004 with 92% attendance. At these meetings, it reviewed the completeness, accuracy and fairness of the Company’s reports and accounts and provided assurance to the Board that these comply with accounting standards, stock exchange and legal requirements. The Committee also reviewed the adequacy and effectiveness of the internal control and risk management systems. It reviewed the work done by the internal and external auditors, the relevant fees and terms, results of audits performed by the external auditors and appropriate actions required on significant control weaknesses. The external auditors, the Finance Director and the Internal Audit Manager also attended these meetings. EXPENDITURE CONTROL COMMITTEE The Expenditure Control Committee meets monthly to evaluate and approve capital expenditure. It is chaired by one executive Director, Tony Tyler and comprises the Finance Director, Robert Atkinson and one executive officer, Augustus Tang. INTERNAL CONTROL AND INTERNAL AUDIT The internal control system has been designed to safeguard corporate assets, maintaining proper accounting records and ensure transactions are executed in accordance with management’s authorisation. The system comprises a wellestablished organisational structure and comprehensive policies and standards. 30 Cathay Pacific Airways Limited 2004 Annual Report The Internal Audit Department provides an independent review of the adequacy and effectiveness of the internal control system. The audit plan, which is prepared based on risk assessment methodology, is discussed and agreed every year with the Audit Committee. In addition to its agreed annual schedule of work, the Department conducts other special reviews as required. The Internal Audit Manager has direct access to the Audit Committee. Audit reports are sent to the Chief Operating Officer, the Finance Director, external auditors and the relevant management of the auditee department. A summary of major audit findings is reported quarterly to the Board and reviewed by the Audit Committee. As a key criteria of assessing the effectiveness of the internal control system, the Board and the Committee actively monitor the number and seriousness of findings raised by the Internal Audit Department and also the corrective actions taken by relevant departments. Detailed control guidelines have been set and made available to all employees of the Company regarding handling and dissemination of corporate data which is price sensitive. Systems and procedures are in place to identify, control and report on major risks, including business, safety, legal, financial, environmental and reputational risks. Exposures to these risks are monitored by the Board with the assistance of various committees and senior management. The Board is responsible for the system of internal control and for reviewing its effectiveness. For the year under review, the Board considered that the Company’s internal control system is adequate and effective and the Company has complied with the provisions on internal control of the Code on Corporate Governance Practices of the Listing Rules.
EXTERNAL AUDITORS The external auditors are primarily responsible for auditing and reporting on the annual financial statements. In 2004 the total remuneration paid to the external auditors was HK$8 million, being HK$6 million for audit and HK$2 million for tax advice. AIRLINE SAFETY REVIEW COMMITTEE The Airline Safety Review Committee meets monthly to review the Company’s exposure to operational risk. It reviews the work of the Cabin Safety Review Committee, the Operational Ramp Safety Committee and the Engineering Mandatory Occurrence Report Meeting. It is chaired by the Head of Corporate Safety and comprises Directors and senior management of all operational departments as well as senior management from the ground handling company, Hong Kong Airport Services Limited, and the aircraft maintenance company, HAECO. ARTICLES OF ASSOCIATION At the Annual General Meeting held on 12th May 2004, the shareholders had passed a special resolution to amend the Company’s Articles of Association for the following main purposes: (i) to reflect the amendments to the Listing Rules in early 2002 which permit a listed company to issue corporate communications to its members and other securities holders in either the English language only, the Chinese language only or both the English language and the Chinese language in accordance with the wishes of its members and other securities holders provided that the listed company has made adequate arrangements to ascertain the wishes of its members and other securities holders; (ii) to reflect the amendments to Appendix 3 to the Listing Rules which came into effect on 31st March 2004 (which Appendix stipulates certain provisions as being required to be included in the articles of association of listed companies); and (iii) to enable Directors to hold meetings by telephone or any communication equipment or electronic means and to incorporate minor drafting improvements. INVESTOR RELATIONS The Company continues to enhance relationships and communication with its investors. Extensive information about the Company’s performance and activities is provided in the Annual Report and the Interim Report which are sent to shareholders. Regular dialogue with institutional investors and analysts is in place to keep them abreast of the Company’s development. Inquiries from investors are dealt with in an informative and timely manner. All shareholders are encouraged to attend the Annual General Meeting to discuss matters relating to the Company. Any inquiries from shareholders can be addressed to the Corporate Communication Department whose contact details are given on page 72. In order to promote effective communication, the Company maintains its website at www.cathaypacific.com on which financial and other information relating to the Company and its business are disclosed. Shareholders may request an extraordinary general meeting to be convened in accordance with Section 113 of the Companies Ordinance. Cathay Pacific Airways Limited 2004 Annual Report 31
Page 6 and 7: Financial and Operating Highlights
Page 8 and 9: 2004 in Review 2004 was the second
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Page 16 and 17: Review of Operations Review of subs
Page 18 and 19: Financial Review The Cathay Pacific
Page 20 and 21: Financial Review OPERATING EXPENSES
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Page 72 and 73: Statistics 2004 2003 2002 Operating
Page 74 and 75: Statistics Productivity HK$ 3.0 Not
Page 76: Corporate and Shareholder Informati

Annual Report 2004

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